Low prices and late payments push Ghana’s cocoa farmers to turn to smugglers

Low prices and late payments push Ghana’s cocoa farmers to turn to smugglers
Low prices and late payments push Ghana’s cocoa farmers to turn to smugglers

Low prices and late payments are pushing Ghana’s cocoa farmers to sell to increasingly sophisticated smuggling networks, siphoning off output from border areas and raising doubts about next season’s production, farmers and officials told Reuters.

Failure to end the financial impasse and close the gap between Ghana’s official price and the amount paid by traffickers, they say, risks worsening an already dire situation for the world’s second-largest producer.

“From January to today, we have not been able to grade any cocoa,” said Frank Amoah-Frimpong, a senior official at the state-owned marketing board Cocobod in the eastern border regions of Volta and Oti. “It’s pathetic. It’s sad.”

Global cocoa prices have risen sharply since the start of the year as poor weather, disease and illegal mining led to disastrous harvests in Ghana and Ivory Coast, the world’s top producer.

While cocoa is now trading at about twice the price it was a year ago, the price set by the Ghanaian government for farmers has not reflected this increase.

That gave an advantage to smugglers operating from neighboring Togo, about a dozen farmers and officials from Cocobod and security forces told Reuters.

Cocobod sells its crop forward and uses the average selling price to set the price to farmers. Since world prices were much lower when this season’s cocoa was sold, increasing the price it pays farmers now would mean accepting a loss on the crop.

The company still increased the producer price by nearly 60% in April, partly to discourage trafficking.

But local buyers said they could not compete with smugglers willing to pay more than double the official price, regardless of the quality of the beans.

Cocobod officials told Reuters that none of the cocoa produced in the Volta and Oti regions since January had been purchased by approved official buyers.

All the cocoa was trafficked, they said, and the area also became a transit point for smuggling beans from other parts of Ghana.

A licensed buyer from eastern Ghana, who asked not to be named for fear of reprisals from criminal gangs, said smuggling had intensified in the past three seasons.

Of the 28,000 bags of cocoa purchased in the 2020/21 season, the buyer has only managed to procure 870 so far this season.

“We have money. If someone tells us today that he has 1,000 bags, I will have money to pay on delivery,” the buyer said. “But farmers sell to those who buy and send to Togo, because their price is higher.

Other licensed purchasing companies in the Volta and Oti regions have struggled due to what they say is a lack of funding from Cocobod. Many have simply closed down.

AN ORGANIZED CARTEL

Joshua Dogboe, a farmer in Likpe region of eastern Ghana, said he was still owed money for cocoa he delivered to state buyer PBC last season, just weeks before it closed its local office.

“I have expenses to pay and when I have money to buy, I will sell quickly,” he told Reuters.

Cocobod said it lost about 150,000 tonnes of cocoa last season due to smuggling and destruction of plantations by illegal gold miners.

Neither Cocobod officials nor the police would give an estimate of losses for the current season.

However, they said smuggling networks have become bolder and more sophisticated and in some cases are financed and run by foreign nationals from Lebanon, China, France and Russia based in Togo.

Abu Seidu, head of Cocobod’s cocoa health and extension division in Volta and Oti regions, said farmers used to transport bags of cocoa across the mountainous border on motorcycles.

“Today you see dump trucks loaded with cocoa and covered in gravel as a disguise,” he says. “If you catch a truck with 800, 500 or 200 bags, that means someone is consolidating the cocoa… It’s an organized cartel now.” (Writing by Joe Bavier and Jan Harvey)

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